Cryptocurrency – UK Banks Feel Threatened By Fraudsters

The unicorn of the 21st century or the future money — that is exactly what cryptocurrency is now being considered worldwide.

The global phenomenon of cryptocurrency is fast-paced and now trending at a much deeper level than previously expected.

While some people are still unaware of this, many governments, banks and companies understand the importance of cryptocurrency like the palm of the hand.

Back in 2016, there were hardly any big accounting firms, major banks or government that did not invest in research on cryptocurrencies or start blockchain projects.

Although virtual currencies, or perhaps, bitcoin noticeably, have experienced explosive growth over the past couple of years, they have also captured the ideas and imagination of some, caused fear among others, and confused the heck out of a few.

In the UK, banks are turning away from the companies which deal in cryptocurrencies and forcing the major companies to open their accounts in Poland, Gibraltar, and Bulgaria. This has, however, prompted some to question the ambitions of the UK of becoming a global hub in terms of fast-growing fintech sector.

Investors’ interest in cryptocurrencies and bitcoin has surged after the prices have rocketed in 2016, but some of the traditional banks are steering clear of the sector and fearing that this all is riddled with fraudsters and criminals.

Lenders find it Hard to Cope with UK Banks

The capital markets all across the UK are suffering greatly with the banks’ recent actions towards bitcoin exchange. The market owners are not allowed to get bank accounts in the UK. In addition, banks are also shutting the UK accounts of all those people who are trading in cryptocurrencies, forcing them to rely on a Bulgarian lender to continue trading.

This strict reaction of banks towards the digital currency is causing capital markets to shift to more welcoming investing environments, such as Toronto.

According to the Chief Executive of the Bitstocks (a bitcoin investment firm)– Michael Hudson – , it has now become impossible to open a bank account in the UK. Hence, they are forced to open bank accounts in Poland or Gibraltar – the two jurisdictions which are showing a more favorable attitude towards Bitcoin.

The Effects of Banks’ Reluctant Approach

The reluctant approach of the UK’s banks is not being considered a wise or strategic. The FCA – Financial Conduct Authority – states that this approach is likely to hurt competition as it is shutting down the start-ups opportunities to enter its sandbox to test their business models.

Some financial authorities in the UK are seriously concerned about this denial phenomenon. They believe that by denying the account opening to certain customers, especially on a large scale, will only cause significant barrier for entrance and will lead to poor competition in many markets.

While the UK banks are maintaining distance, considering the cryptocurrency as the main weapon of many criminals to trade illegal goods on the ‘dark web’, some countries such as Gibraltar and Japan have strict rules for cryptocurrencies.

But much to your surprise, these rules are still unregulated in many areas of the world which also include the Europe.